The RBA sees ATMs declining as we use less cash

The Reserve Bank expects banks and other institutions to start removing under-used ATMs and says this may even be "desirable", as a blitz on withdrawal fees worsens the financial pressures on Australia's large fleet of cash machines.

New research from the central bank underlines the forces that are crunching the economics of ATMs, which were first rolled out in the 1980s but are now bearing the brunt of declining cash use, and fee cuts.

The article in this month's RBA Bulletin says withdrawals are declining "rapidly", with average withdrawals per machine nearly halving since 2007-08.

This slide has hit ATM fee revenue at the same time as banks are grappling with higher cost from maintaining the network, such as from cash handling. Even so, the number of machines in Australia is still near record highs, at more than 32,000.

As a result of these pressures, the RBA is tipping a decline in the number of ATMs, which have become less attractive for banks to own.

"With ATM use declining rapidly and the costs of ATM deployment continuing to rise, the removal of ATM fees may strengthen the case for deployers to reduce the size of their ATM fleets," the article said.

"While it is too early to assess the full impact of the recent announcements by the major banks, it is likely that they will focus attention on the growing disparity between the number of ATMs in Australia and the demand for ATM services.

"Some consolidation seems likely, and may even be desirable for the efficiency and sustainability of the ATM network, though it will be important that adequate access to ATM services is maintained, particularly for people in remote or regional locations, where access to alternative banking services is often limited. "

The article, by RBA staff Stephen Mitchell and Chris Thompson, said rationalisation could occur through banks removing their least-used machines, or by merging their fleets with those of other banks.

Countries including Sweden and Finland had adopted shared ATM models successfully, the RBA said, while the major Dutch banks were also setting up a joint network to ensure there was still enough access to cash.

New figures included in the article said most major banks had trimmed the size of their ATM networks over the past two years. ATM specialist Cardtronics owns the largest fleet, with 10,428 machines, followed by Commonwealth Bank with 3733 machines and Westpac with 2933 machines.

It also noted that Australia had a high number of ATMs relative to its population. There are 1300 ATMs per million people in Australia, the fifth highest ratio on a list of 21 countries compiled by the RBA.